Excess Premium tax Credit

[Spanky]

I have a client in 2023 whose salary was $25,000 for the year. She was there from January through April and made $8,500.00.  She was on the Market Place Insurance and not covered with insurance with the company. In May she started a new position, made an additional $63,000.00 in the year and her insurance was covered by the company.

In preparing the return, the calculations for the excess advance premium tax credit are picking up her total income and therefore is adding an additional $1,200.00 to her tax liability.  If the individual didn't switch jobs, I'm certain she would have been fine at the end of the year.

Does anyone know if there is a way to adjust for this excess liability, or is she a victim to . the laws.

Thank you

[Just-Lisa-Now-]

Nope, thats how it works, its a terrible system.   

Thankfully the TP is making more money now and can afford to pay back the discount they got while they had lower income.

[Spanky]

Thank you Lisa.  That was how i understood it as well.  Makes absolutely NO logical sense at all that someone should be penalized like this.  I suppose if one is on the marketplace one month this would happen as well..

[sjrcpa]

I believe they are supposed to notify the marketplace when their income changes.

(Not that people do.)

[Spanky]

Hi SJRCPA,

She did notify the Marketplace.  They stopped the coverage because she was covered by the company she started working for..It's ludicrous that she or anyone would be charged at a rate for the whole year. 

[Just-Lisa-Now-]

even when they notify the marketplace, its too late, the damage is already done and chances are they'll end up paying back the discount they got while un/under employed.